With just two weeks remaining in the legislative session, the forces of socialized medicine were defeated, at least for now. After losing decisively in the Wyoming Senate and finding no traction in the Wyoming House, Medicaid Expansion supporters tried to ram this policy through with an amendment to the budget bill. Amendment 31 of HB0001 failed overwhelmingly, with 41 Nays and only 15 Ayes. Supporters cited the jobs it would create as well as increased federal funding for the state of Wyoming. 

But the most repeated argument – that expanding Medicaid will lead to greater access to care and fewer visits to the emergency room – is likely the most erroneous.

It is conventional to assume that the simplest path to greater healthcare access is through a greater availability of health insurance.  Given that Medicaid already offers health insurance to families and individuals in poverty, the federal government tried to increase access to health insurance by broadening Medicaid eligibility to a wider pool of individuals.  This was the primary argument made by supporters of expansion in the Wyoming House of Representatives.

In her defense of Amendment 31, Representative Mary Throne related a story that took place during the previous attempt to expand Medicaid in Wyoming:

“I have a real life story to tell you about a friend from the Northern part of the state she shared with me the day that the Senate killed Medicaid.  That afternoon there was a man in Campbell County with diabetes. Not old enough for Medicare, but uninsured.  He had stopped taking his insulin because he could no longer afford it any more.  Well they had to rush him to the hospital that afternoon because he was in insulin shock.

That’s what happens to real people with real lives while we argue about taking money or not taking money from the federal government.  It’s the right thing to do. We are sent down here to do what we can with the information that we have to make the lives better of the people around us.”

Her story stirs concerns.  However, if Rep. Throne herself was aware of Medicaid’s impact on patients and hospitals she would not want that man from Campbell County anywhere near this federal entitlement. On average, Medicaid reimburses Wyoming doctors for only 84 percent of the cost of care that they provide to its recipients.  Without properly compensating providers, fewer providers are serving Medicaid patients and now, Medicaid systematically can deprive the poorest individuals of essential care.

The US Department of Health and Human Services recently conducted a survey of hospitals and clinics that accept Medicaid patients as part of an investigation into the availability of care for those that rely on the program.  HHS found that more than half of these providers had ceased serving the program’s beneficiaries.  These providers were either no longer practicing medicine, no longer accepting new Medicaid patients, or no longer serving Medicaid patients at all. Another study from the New England Journal of Medicine discovered that children on Medicaid were being denied appointments by two-thirds of surveyed doctors.  Children with private insurance were only being denied by 11 percent of doctors.

Without access to primary care and regular doctor appointments, Medicaid patients routinely suffer preventable health conditions that force them into the Emergency Room more frequently than even the uninsured.  Medicaid beneficiaries on average visit the ER 40 percent more frequently than those without insurance.   Economists from MIT and Harvard noticed this disturbing trend while observing the use of emergency rooms in hospitals in Oregon after the state initiated a Medicaid expansion of its own in 2008.

And if Medicaid beneficiaries in Wyoming are currently finding it difficult to access care, adding an estimated 17,600 individuals to this dysfunctional program will only put treatment further out of their reach.  Wyoming is currently ranked 9^th among states with the least doctors per residents.  Proponents of Medicaid Expansion in the legislature did not stop to consider whether the state’s hospitals have the capacity to absorb so many new patients. 

The question of whether enrolling individuals in Medicaid will improve their access to health services has been studied vigorously and the data is quite clear.  By underfunding doctors, Medicaid deprives society’s most needy of healthcare.  The House’s down vote on Amendment 31 forestalled expansion of a dysfunctional system that should be eliminated in favor of one that can better serve the interests of both patients and providers.

If at first you don’t succeed, try, try again.  After the Wyoming legislature overwhelmingly rejected Medicaid expansion, its advocates returned to the drawing board to design another half-baked measure to help hospitals cope with the rising cost of uncompensated care. Senate File 145, otherwise known as the Uncompensated Care Bill, emerged as the alternative to Medicaid Expansion.  And like Medicaid Expansion before it, the Uncompensated Care Bill is the latest quick fix that the legislature hopes will stop the bleeding, but fails to address the underlying symptoms.

Before getting into how uncompensated care affects Wyoming, it is important to understand what uncompensated care is. Uncompensated care comes in two forms, charity care and bad debt. Charity care is service provided by hospitals without any expectation of payment, usually in the form of visits to the Emergency Room.  Bad debt is when services are provided and payment is invoiced, but the patients never end up fully reimbursing the hospital.

Uncompensated care burdens hospital of all types, but has been particularly hard on non-profit hospitals. Unlike for-profit hospitals, the IRS requires that non-profit hospitals provide charity care for little or no compensation from their patients. However, the IRS does not specify how much care a hospital is required to provide; this can make a non-profit hospital’s tax status a political punching bag.  In 2012, the Illinois Department of Revenue threatened to revoke the property-tax exemption from three non-profit hospitals for supposedly providing insufficient levels of charity care. As one might expect, cases like these make non-profit hospitals wary of turning away the uninsured from charity care. 

However, charity care and bad debt are not solely responsible for the increasingly strained finances of hospitals.  Medicaid notoriously pays hospitals for less than the cost of care they provide to its beneficiaries.  When Medicaid’s low reimbursements are counted alongside charity care and bad debt, uncompensated care accounts for 8 percent of the total cost of Wyoming’s hospitals, but several hospitals, such as Carbon County Memorial and Niobrara Health and Life have spent upwards of 15 percent.

The problem of uncompensated care will likely be further exacerbated by new rules established under the Affordable Care Act.  Tax-Exempt hospitals will soon be prohibited from engaging in what the IRS deems to be “Extraordinary Collections Actions” related to recouping debts owed by non-paying patients.  Hospitals will be barred from taking legal action against individuals of limited means that do not repay their debts.  And they will also be unable to sell this debt to interested parties.

What Wyoming’s legislature ultimately passed on their last day in session will shift these mounting costs from hospitals to the taxpayer.  SF 145 earmarks $3 million to pay for for-profit and non-profit hospitals’ uncompensated care. $2 million will go to hospitals will less than 100 days of cash on hand.  And the rest will be made available for hospitals with greater financial security.

Aside from assertions by supporters in the legislature, SF 145 will not stop uncompensated care from bleeding Wyoming’s hospitals dry. Non-profit hospitals are still expected to provide large amounts of charity care, and the cost of medical care continues to rise every year.  Without serious changes to how we as a society provide healthcare to the poor, legislators will be back next year looking to shift these costs onto taxpayers again.

In March, the Supreme Court heard oral arguments in King v. Burwell, a case that could decide the fate of Obamacare in Wyoming and around the country.  The case centers on whether the federal government has the authority to issue tax credits to subsidize insurance on exchanges that it has established.  If the chief justices rule against the federal government, it could mean the end not just for Obamacare’s subsidies, but its mandates and regulations as well.  And herein lies an opportunity for advocates for patient-centered health reform to start making real changes to the way healthcare is financed and delivered.

As many health policy experts have noted, the Affordable Care Act’s design and purpose rests on three basic foundations; insurance regulations, the individual mandate, and insurance subsidies.   If just one of these bulwarks is removed, the entire structure breaks down.

The law’s insurance regulations prohibit insurance companies from charging individuals of the same age different premiums, regardless of whether some of them have health conditions that will make their care more expensive.  These “Community Rating” rules force insurers to raise premiums on healthier policy-holders in order to pay for the care of their sicker beneficiaries.  Left to their own devices, younger and healthier individuals will forego insurance if their premiums become unaffordable.  When healthy individuals flee the insurance market, health insurance costs are foisted on a smaller group of less healthy individuals.

This is where the individual mandate comes in.  By imposing tax penalties on individuals that are uninsured, the ACA avoids the feared “Death Spiral” that occurs when costly mandates drive the young and healthy out of the insurance market.  However, community rating and the law’s other mandates drive up the cost of insurance, creating substantial financial burdens for lower income individuals who will be forced to purchase insurance.

The third and final foundation to the law is the federal tax-credits that subsidize the cost of premiums for individuals between 100 and 400 percent of the federal poverty line.  But who are entitled to these subsidies?

The federal government argues that subsidies are available to those that seek insurance in the insurance exchanges established by state governments as well as the federal insurance exchange and has enforced the law accordingly.

There’s just one problem with this interpretation; as Obamacare was written and passed into law, only those that purchase insurance on exchanges “Established by a state” are eligible for subsidies.  If the Supreme Court were to rule in favor of the plaintiffs challenging the subsidies on the federal exchange, several things will happen.

The first is that millions who had signed-up for insurance on federal exchanges and received subsidies will lose them and potentially have to repay them in back taxes. As of mid-February, 7.5 million individuals that accessed insurance on the federal exchanges were eligible for subsidies.  91 percent of Wyoming’s enrollees were eligible for subsidies, which on average covered 76 percent of the cost of premiums.  A victory for the plaintiffs would quadruple the cost of insurance for thousands in the Equality State.  It’s estimated that the average recipient of insurance subsidies in Wyoming would see their monthly premiums increase from $135 to $558 if they went away.

Without the subsidies, the individual mandate becomes much harder to enforce.  If the least expensive insurance on an exchange costs more than 8 percent of an individual’s household income, they are no longer required to buy insurance. The Kaiser Family Foundation estimates that with access to subsidies, only 3 percent of the uninsured fall into this exemption.  However, if the subsidies went away, 83 percent of the uninsured would no longer be required to buy insurance.

Without the individual mandate, the young and healthy will have no reason to purchase expensive insurance in order to subsidize care for someone else, and will drop coverage.  As the younger exit the insurance market, the cost of care will have to be paid for by a smaller number of insured, which in-turn will drive more people out of the market, and raise the cost for those remaining.  Take away the tax-credits and mandates, and the health insurance market falls apart under the weight of Obamacare’s community rating rules.

In the event that the Supreme Court strikes down the subsidies, it will be up to Congress and state lawmakers to draw-up plans to make sure the health insurance market isn’t thrown into disarray.  As the Wyoming Liberty group has outlined in the Five Step Plan to Achieve National Healthcare Reform, health insurance must be transitioned back into the free market and government-run programs must be redesigned to benefit our most vulnerable citizens.

Ever since David King sued the federal government for illegally subsidizing health insurance payments on federal exchanges, governors in states with federal exchanges have scrambled to make contingency plans.  Reactions ranged from Bobby Jindal of Louisiana consulting Congressional leaders on passing an alternative to Obamacare, to Governor Snyder of Michigan demanding his state’s legislature create a state-run insurance exchange in order to continue receiving federal insurance support.  Fortunately, Congress is crafting contingency plans to offer immediate relief for millions of individuals currently receiving subsidies.  These Congressional plans would grant states flexibility to determine the best insurance policies for their residents.  This is an opportunity for Wyoming to make substantial health insurance reforms that lower premiums and expand coverage.

The proposals floated by House and Senate Republicans deliver the very sort of response Governor Matt Mead is looking for from Congress. During the final day of the 2015 legislative session, the Governor had this to say about King v Burwell:

“We are hopeful, and I think there is some reason to believe, that the supreme court will not say as of this date and time that it’s dead – the subsidies on the exchange – but will say this is wrong and it needs to be fixed and statutorily needs to be fixed and we’re going to give you, for example nine months, to fix that.”

At present, Republicans have released two proposals in Congress. Both proposals protect the estimated 8.8 million individuals currently receiving subsidies on the federal exchanges from financial disruption, and grant states the freedom to craft their own insurance policies.

The first bill, “Off-Ramp from Obamacare” sponsored by Representatives Paul Ryan (R-WI) and John Kline (R-PA) subsidizes means-tested individuals’ insurance purchases with refundable tax-credits. Ryan’s plan differs from Obamacare by giving states the opportunity to opt-out of Obamacare’s mandates and regulations.  For states that do, individuals and business will be freed from the individual and employer mandates.  People will be free to shop across states lines for their insurance needs, and most importantly, states will be free to reject the law’s community rating, age rating, and benefit mandates that have sent the price of insurance into the stratosphere.

A second bill, the Patient CARE Act, sponsored by Senators Richard Burr (R-NC), Orrin Hatch (R-UT), and Fred Upton (R-MI) is similar to Paul Ryan’s plan but has some notable differences.  Like the Off-Ramp, it has means-tested tax credits for individuals.  The individual and employer mandates would be stricken and the federal government could no longer decide the terms and conditions of insurance policies.  What differentiates the CARE Act from the Ryan plan is that it makes tax-credits for private insurance purchases available to those eligible for Medicaid.  Offering low-income individuals the option to opt out of Medicaid would not only improve their access to health care but also addresses our nation’s growing unfunded liabilities.

If one of these proposals passes both houses of Congress and is signed by the President, the question of how insurance is regulated will fall to our nation’s 50 governors and 7,383 state legislators.  Once freed from the Obamacare straitjacket, Governor Mead and state legislatures would have the opportunity to repeal statutes that leave policy holders with fewer choices and thus make health insurance more affordable.

On the day before April Fool’s Day, Armstrong v. Exceptional Child Center buried any illusion that Medicaid Expansion will improve access to health care.  In a 5-4 decision, the U.S. Supreme Court barred doctors, dentists and pharmacists from suing states for allegedly curtailing reimbursements for care they provide to Medicaid patients. Although the ruling doesn’t directly impact Medicaid’s promise to provide quality care for the poor, fulfilling that promise requires a wide and accessible network of physicians.  By this metric, Medicaid hasn’t fulfilled its pledge for years and the Supreme Court just made it official.

Even at an enormous and growing cost, this government program has consistently shown its inability to provide quality healthcare.  Yet despite its dismal track record, Wyoming legislators may attempt to expand Medicaid again next year.

In Armstrong v. Exceptional Child Center, the plaintiffs alleged that the state of Idaho violated its pledge to provide Medicaid in a manner which:

“assure[s] that payments are consistent with efficiency, economy and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan.”

In 2005, Idaho’s legislature passed a law that increased Medicaid’s reimbursement rate for doctors, but the state lacked the funds to pay the new rates.  When the legislature failed to raise rates as promised, the Exceptional Child Center and another home health-care provider sued the state for failing to comply with Medicaid’s pledge to make payments that are consistent with quality of care.

Justice Antonin Scalia wrote the majority decision, stating: “It is difficult to imagine a requirement broader and less specific” than Medicaid for state payment plans.  Given that this pledge is so vague, Justice Scalia and four other justices said that only the Department of Health and Human Services (HHS) could decide which state Medicaid program met these criteria, through the traditional regulatory review process.

The justices also feared that if they decided in favor of the Exceptional Child Center, they would create a precedent, allowing doctors and hospitals to sue whenever they felt that the program’s payments were insufficient.

As it turns out, the plaintiffs were right about Medicaid’s reimbursement rates.  Idaho’s Medicaid program pays hospitals just 88 percent of what Medicare pays.  And Medicare typically pays hospitals only 80 percent of what private insurers pay. With every passing year that Medicaid reduces payments, fewer and fewer doctors have been willing to take Medicaid patients.

Making the situation worse, HHS steadily expanded the list of procedures that states must pay for through Medicaid and loosened eligibility for the program—can you say Medicaid expansion?  As Medicaid’s financial obligations skyrocketed, states have been forced to slash their payments to doctors and hospitals.

In Wyoming, Medicaid’s rising obligations have begun crowding-out other items in the state budget. Since 2009 the cost of Medicaid rose by 4 percent, yet money in the General Fund that finances Medicaid has only increased by 1 percent.  Even after rejecting Medicaid Expansion, Medicaid will continue to consume a growing share of the budget at the expense of education and vital public services.

After the Supreme Court’s ruling reaffirmed HHS as the sole judge of state compliance with Medicaid’s charter, doctors and patients now have far less legal standing to oppose future cuts in the program’s reimbursements.  And states will have significantly more leeway to reduce reimbursements as the program’s costs continue to grow.

Armstrong v. Exceptional Child Center offers a valuable lesson to Wyoming; goods and services that governments provide are entirely contingent upon the capacity of taxpayers to pay for them.  And when governments run out of taxpayer dollars, they renege on their promises.

Ever since Congress passed Obamacare in 2010, each April 15, the dreaded tax return filing day, brings ever more complexity to our federal tax code.  This year’s complexity is the employer mandate, the most harmful of the law’s tax provisions because it spells trouble for businesses and workers alike.  If the Supreme Court sides with the plaintiffs in King v. Burwell, the mandate becomes a lot harder to enforce and could free states from its distortions entirely.

The employer mandate is by far the most ill-conceived dictates of the President’s healthcare law, not to mention the most far-reaching.  It requires every employer with 100 or more employees (and 50 or more beginning in 2016); be they private, public, or non-profit, to offer all of their full-time employees health insurance.  Employees are considered full-time if they work 30 or more hours a week.

The mandate’s structure as well as its enforcement mechanisms hurt both companies and employees. Company growth could be stymied if hiring that 100^th employee means it has to offer health insurance to all its employees.  Firms also have a great incentive to shift workers from full-time time status to part-time.  Employees who qualify for full-time work under normal circumstances must now compete with part-time workers in a job market where firms refuse to expand their payroll.

When an individual purchases health insurance on an exchange and receives a subsidy, the IRS will be notified if the company they work for failed to offer them insurance, and will fine the company.  The CBO estimate that between 2015 and 2024, the mandate will impose $139 billion in tax penalties on employers.

This IRS requirement also encourages business to hire individuals from high income households at the expense of those from low and moderate income households.  As mentioned earlier, the mandate is enforced when the IRS receives verification of an individual’s work-status when they receive subsidies. But if an individual is from a household that makes too much money to qualify for subsidies, the IRS is never notified should they purchase insurance on an exchange.  This means that firms can still get away with denying insurance to an employee from a high-income household, but would be stuck with paying health insurance costs if they decided to hire someone from a low income household.

If a business fails to offer insurance to their fulltime employees, the IRS will tax them $2,000 per full-time employee each year.  However, with skyrocketing insurance costs, many employers may find it more cost effective to pay the health tax instead of their workers’ health insurance premiums.

Because the employer mandate creates such distorted incentives, economists don’t expect to see many people receiving insurance from their employer.  The Urban Institute expects the mandate to insure only 200,000 individuals.

Fortunately for employees and employers, a pending Supreme Court case could make the mandate much easier to skirt.  The nine justices are currently considering King v. Burwell, a case that will decide whether the IRS is illegally subsidizing insurance in states with federal exchanges.  According to the explicit language of the Affordable Care Act, only individuals who purchase insurance on exchanges “established by a state” are eligible for subsidies.

Without insurance subsidies, the employer mandate becomes impossible to enforce. The employer mandate’s penalties are triggered when an individual that works at a firm subject to the mandate purchases insurance on an exchange and gets subsidies. If the subsidies go away in states with federal exchanges, employers will be freed from the employer mandate. There are currently 57 million employees and 252,000 businesses in states with federal exchanges that are subject to the employer mandate. In Wyoming, 1,074 businesses and 107,000 employees would no longer be subjected to the law’s expensive dictates.

The employer mandate is one of the most egregious provisions of the Affordable Care Act. It taxes companies to the tune of billions for growing and encourages them to hire people from high-income households.   Luckily for employees and employers, the architects of Obamacare put as little thought into its enforcements as they did into its design.   If the Supreme Court’s nine justices rule that the IRS illegally subsidized health insurance on federal exchanges, Wyoming and 35 other states could be freed from the employer mandate just 6 months after it was slated to go into effect.

Throughout the debate to expand Medicaid during the 2015 Legislative Session, opponents repeatedly claimed that the federal government couldn’t be trusted to keep its promise to cover 90 percent of Medicaid Expansion’s costs. So it should come as no surprise that the Obama Administration has now broached the idea of reneging on its existing financial promises. In a letter to the Deputy Secretary of Medicaid in Florida, the head of the federal Center for Medicare and Medicaid Services (or CMS) threatened to withhold funding to a Medicaid pilot program in the Sunshine State unless it expanded Medicaid. If successful, the federal government would have found a way to undermine the Supreme Court’s 2012 decision on Medicaid Expansion and foist a federal program that delivers woefully inferior healthcare onto millions more patients.

In National Federation of Independent Business v. Sebelius, the Supreme Court ruled that Medicaid expansion “violates the Constitution by threatening States with the loss of their existing Medicaid funding if they decline to comply with the expansion.” It struck down the Obamacare provision that allows HHS to withhold existing Medicaid funding to states that did not expand the program’s eligibility.  The only funding HHS could withhold was the funding designated for Medicaid Expansion itself.

Now CMS is threatening to withhold funding to renew LIP, a Florida Medicaid pilot-program unless the state expands Medicaid’s eligibility. In a letter to Florida’s Medicaid director, the federal agency’s Acting Director noted “the state’ expansion status is an important consideration is our approach regarding extending the LIP [pilot] program.” Put plainly, if Florida refuses to expand Medicaid, it could lose more than one billion dollars in federal funding for this program.

LIP, or Low-Income Pool, provides financial support to healthcare providers that offer uncompensated care to uninsured and underinsured individuals in Florida under a Medicaid Section 1115 Waiver. Section 1115 Waivers allow states to experiment with different funding mechanisms outside of certain Medicaid requirements, including eligibility, benefits, and cost-sharing requirements. Florida contributes $700 million to LIP and the federal government provides $1.3 billion.

LIP was first approved in 2005 and slated to last until June 30, 2015. But rather than renew the program, CMS’s Acting Director said that expanding Medicaid would be more effective at addressing the problem of uncompensated care than LIP. Vikki stated in her letter:

“With Medicaid expansion, individuals with coverage would be less likely to seek bankruptcy protection or generate unpaid medical bills.”

However, this uncompensated care rhetoric is not supported by reality. The federal government and many health experts measure uncompensated care by subtracting what doctors bill by what patients pay. However, insurers almost never pay billed prices—the bill they pay on behalf of patients is typically discounted by 55 percent. When comparing the prices insured patients pay with prices paid by the uninsured, two-thirds of uninsured patients actually pay more than those with insurance, including those insured through Medicaid.

Seems legislators in Wyoming were right. But if Florida’s legislature and Governor fold under pressure, every state that did not expand Medicaid and took advantage of Medicaid’s waivers could also lose billions in federal funding unless they expand this entitlement. Wyoming currently has eight Medicaid waivers that cover services ranging from assisted living to long-term care. At present, these eight pilot programs cost Wyoming over $59 million. Without federal funding, the cost of these programs to Wyoming taxpayers will double, putting these programs and the health of thousands of patients at risk.

Despite the Supreme Court ruling in NFIB v. Sebelius that the federal government can’t withhold a state’s entire Medicaid payments, the federal government can still find ways to blackmail state taxpayers into expanding Medicaid. Medicaid describes itself as a “state-federal partnership,” but Florida’s battle with CMS shows who really holds all the power. Whether it’s healthcare or highway dollars, federal funds carry strings that bind state legislators. Medicaid strings are bankrupting state governments and leaving patients in poorer health than if they went without insurance at all. When will states realize that Medicaid dollars are not a windfall, but a fiscal straightjacket?

When progressives make the case for Medicaid Expansion, without fail they remind their listeners that the federal government has pledged to cover 90 percent of the cost of expansion. But a report from the Foundation for Government Accountability sheds light on just how empty the federal government’s promises really are. On multiple occasions, the federal government has reneged on its commitments to cover the cost of programs it collaborates with states to fund, leaving them with billions of dollars in additional obligations. And while the Obama Administration has continued to market Medicaid Expansion as “free money” to the state legislatures, the White House has proposed changes to Medicaid’s cost-sharing formula that would substantially increase the proportion of the program’s expenses that states will be stuck paying.

With the exception of laws relating to constitutional issues, the federal government has very few ways to force states to pass laws. When the federal government wants states to pursue certain policies, they will bribe them with grants and other funds–but with strings attached. The Obama Administration followed this tradition by offering to cover 100 percent of the cost of Medicaid Expansion from 2013 to 2016 and then 90 percent of the cost thereafter. But will the current administration and future administrations keep this promise?

A recent report from the Foundation for Government Accountability shows that the answer is mostly likely no. Over the past 40 years, the federal government has reimbursed states far less for programs that the federal government and states collaborate on, leaving state taxpayers holding the bag.

In 1975, Congress passed the Individuals With Education Disabilities Act (IDEA). The law encouraged states to fund programs to educate disabled children by promising to cover 40 percent of the annual costs of IDEA programs starting in 1981. Without fail, Congress has underfunded the program every year to the tune of $250 billion.

           Source: http://thefga.org/wp-content/uploads/2015/04/UO-PromisesMadePromisesBroken-Final.pdf

The debate over whether the federal government will renege on its Medicaid promises to states is not hypothetical–it was proposed in the White House’s budget proposal to Congress in 2013. Medicaid reimburses states that expanded Medicaid for 100 percent of the cost of the expansion population, then 90 percent after 2016. This covers individuals between 100 and 138 percent of the Federal Poverty Line (or FPL). But Medicaid has a different cost-sharing rate that covers individuals below 100 percent of the FPL. The federal government reimburses Wyoming for 50 percent of the healthcare costs of existing Medicaid enrollees.

The Obama Administration proposed scrapping this patchwork of cost-sharing schemes and move to a uniform or “blended” cost-sharing arrangement. This blended rate is an average of states’ current Medicaid match and the expansion match rate. According to the Heritage Foundation, if Congress adopted the White House’s changes to Medicaid and applied a single “blended” cost-sharing rate to every state, states will be forced to increase their funding for Medicaid by over $78 billion between 2014 and 2022.

Had Wyoming expanded Medicaid under the existing arrangement, Wyoming’s cost would have been $118 million between 2013 and 2022. However, if Congress had passed the blended Medicaid rate in 2013, Wyoming’s financial obligation would have risen by more than 258 percent, to $455 million. Where would the money have come from had Congress passed the President’s proposed changes to Medicaid? The Wyoming government has a projected budget deficit of $338 million for the 2017-18 biennium, even without the burden of higher Medicaid costs. These broken promises would have either been paid by Wyoming’s taxpayers or Medicaid’s beneficiaries in the form of lower reimbursements and reduced access to care.

State legislators would be foolish to take the federal government’s word that it will cover 90 percent of Medicaid Expansion’s costs. Washington has welshed on promises worth hundreds of billions of dollars in the past—why would it be different this time? Let’s face it, the federal government’s promises are not worth the paper they’re printed on.

In four weeks, the Supreme Court will rule on King v. Burwell. A ruling in favor of the plaintiffs invalidates federal insurance subsidies for the 36 states without a state exchange and frees them from the individual and employer mandate. States that built their own exchanges bound their residents to Obamacare’s mandates, penalties, and restrictions for the long-term. If the Obama Administration offers Wyoming and the other states without a state exchange insurance subsidies in return for building an exchange, they should not take the bait.

Obamacare currently gives state lawmakers a choice; let the federal exchange serve as their health insurance marketplace or they could build and operate online state health insurance exchange of their own. The federal government even covered all the startup costs of state exchanges until January 1, 2015.

But like most federal-state “partnerships,” state exchanges came with strings attached. Is it any wonder that most states decided from the start they would rather leave the operation and maintenance of insurance exchanges to the federal government? States that decided to build their own exchange are discovering these boondoggles cost far more than what was promised.

Of the 17 states that built their own exchange, half are struggling to stay afloat and three have closed permanently. For example, California fell short of their 2015 enrollment goals by 300,000 and only managed to retain 65% of its enrollees from 2014. The Golden State’s exchange is now looking at an $80 million deficit. Washington State’s health exchange faces a $4.5 million shortfall after enrolling only 80 percent of their goal.

Despite receiving $5.4 billion in federal grants, state exchanges can’t pay for themselves and are becoming new unfunded liabilities on state taxpayers. State exchanges require enormous individual sign-ups to recoup their costs but they are failing to successfully enroll individuals that apply.

State exchanges must interact with five federal agencies to verify an individual’s citizenship, criminal records, income, and whether they are alive or dead.   Using this data, exchanges must calculate in real time who is eligible for insurance subsidies and who is not. But the agencies that state exchanges must communicate with use extremely outdated software, some from the 1970’s. When the exchanges fail to automatically interact with federal agencies and break down, the exchanges are forced to hire additional employees to perform these tasks manually, further exacerbating sky high costs. Building an exchange in Wyoming would only replicate failures we’ve seen in other states.

When government promises don’t materialize, everyone else pay the price. The Colorado Exchange’s board of directors recently voted unanimously to raise $40 million in additional fees on the Rocky Mountains state’s 1.2 million enrollees. Governor Gina Raimondo of Rhode Island wants to introduce a 3.8 percent fee on every individual insurance policy and a 1 percent fee on every small employer plan.

These costs aren’t temporary either, they’re ongoing. The federal government agreed to pay for start-up costs until January 2015, after which states are responsible for paying all future costs. For Vermont’s state exchange to be self-sustaining, for example, it would have to exact additional fees of $1,613 from each enrollee to cover $51 million in annual expenses. Prior to Obamacare, $1,600 could pay for an entire year of premiums. That’s right; the exchange administration cost is as much as the insurance itself!

Obamacare’s supporters will tell states that King v. Burwell will throw an otherwise effective government program into disarray and they should build exchanges to allow the law to function as intended. The President’s healthcare law has been a colossal failure from the start and state exchanges are just the latest chapter in this tragic saga. Despite the billions spent building exchanges, they haven’t attracted enough enrollees and are either being shut down or charging higher fees to remain in existence. Our legislature and governor should not throw this albatross around the necks of the people of Wyoming.

Progressives constantly frame the debate over healthcare reform as a false choice: should healthcare be financed through insurance companies or the government?  Both options leave patients at the mercy of third parties.

Now an alternative known as Direct Primary Care promises to put the patient back in the driver’s seat.  The patient pays a flat monthly fee or retainer, and in exchange, physicians provide primary care services.  These services include checkups, urgent care, and chronic care management.

Fees average between $50 and $100 per month, a third of the cost of the average insurance premium in America and one-fifth of the average premium in Wyoming. Direct Primary Care removes insurance entirely from a patient’s interaction with their doctor, leaving them free to pay only for the primary services they will be using.

This direct model reduces the cost of care by aligning the interests of physicians with their patients.  Unlike the traditional fee-for-service system where doctors are paid for every procedure they perform, the incentive for physicians within Direct Primary Care is to control costs over the long-term.  Patients pay a single fee every month, so it is incumbent upon their doctors to keep them healthy without providing excessive or unnecessary care.

Direct Primary Care also benefits physicians.  Negotiating with insurance companies cost medical practices $215 billion in administrative fees in 2011, accounting for a quarter of all hospital spending.  Contracting directly with patients would cut these enormous administrative costs, allowing hospitals and private practices to spend that money on services for patients. Is it any wonder that a 2014 survey found that 20 percent of physicians either practice direct care or were planning to over the next three years?

State lawmakers across the country recognize Direct Primary Care’s potential to improve health care access and have taken measures to protect physicians offering it from overregulation.  Thirteen states have passed laws defining its practice as “not insurance” and exempt from the authority of state insurance commissions.

In 37 other states, including Wyoming, physicians still face legal and regulatory obstacles to offering direct patient care.  Since direct care providers assume financial risk when they offer patients unlimited access to primary care for a fixed monthly fee, some states consider them a “risk-bearing entity” and have smothered them in a deluge of insurance regulations.  It’s time for Wyoming to recognize the value of Direct Primary Care.

Under the Wyoming Constitution, Article 1, Section 38 reads:

“Any person may pay, and a health care provider may accept, direct payment for health care without imposition of penalties or fines for doing so.”

However, if a physician bases their fees on their patients’ medical history (the same way insurance companies determine premiums), Wyoming’s Department of Insurance considers them a “risk bearing entity,” and subject to its statutes.  It is these regulations that have made health insurance unaffordable to begin with.

If Wyoming provided regulatory certainty to physicians that practice Direct Primary Care as some states have, we could make real gains in making healthcare more affordable and accessible.  A study found that individuals who had received direct patient care cost 20 percent less than those that used traditional insurance, savings $679,000 for every 1,000 patients.  Wyoming residents currently pay the highest health insurance premiums and deductibles in the country.  Direct Primary Care could save them thousands of dollars in health expenses every year.

Unlike virtually every other sector in life, patients have almost no control over the healthcare they buy.  Insurance plans are mandated to cover dozens of procedures most people will never desire or use.  And doctors are paid based on the quantity of procedures they perform and not on their effectiveness.  Under Direct Primary Care, patients decide what primary services they want and pay a single fee for them.  Wyoming should follow the example of its neighbors and modernize its health care laws.

The Supreme Court today upheld the authority of the IRS to pay subsidies on the federal insurance exchange under the Affordable Care Act, despite the law’s clear language that subsidies are available on exchanges “established by a state,” undermining the meaning of words and the separation of powers, Wyoming Liberty Group said today.

“I am concerned that the quality of care for all of us in Wyoming, including the most vulnerable, cannot be sustained by government programs. There are many opportunities for alternatives that will better serve the people of Wyoming.”

Chief Justice John Roberts wrote the majority opinion, admitting that if the ACA’s language was read plainly, the IRS could not offer subsidies on the federal exchange. However, the majority decided that these words must be placed within the context of the law’s larger goals of expanding health insurance coverage.

Justice Antonin Scalia wrote the dissenting opinion, citing “The cases will publish forever the discouraging truth that the Supreme Court of the United States favors some laws over others, and is prepared to do whatever it takes to uphold and assist its favorites.”

“It is inappropriate for the court to bail-out the IRS when it ignores the plain language of a law passed by Congress,” said Charlie Katebi, Healthcare Policy Analyst at the Wyoming Liberty Group. “The rule of law matters.”

For more information on King V. Burwell and Obamacare, please click here.

For more information or to set up an interview, please contact:

Charlie Katebi, Health Care Policy Analyst

307-632-7020

After months of anticipation, the Supreme Court ruled in favor of the Obama Administration in King v. Burwell and upheld the IRS’s authority to issue insurance subsidies on the federal insurance exchange as part of Obamacare. This decision gives cover to the abuses of an out-of-control agency and allows it to continue punishing Wyoming through the individual and employer mandate.

Under Obamacare, individuals that make less than $47,000 and families that make less than $97,000 are eligible for insurance subsidies on exchanges “established by a state.” However, when the IRS released its rule to enforce this provision, it made insurance subsidies available on state-based exchanges and the federal exchange. In Justice Antonin Scalia’s dissenting opinion, “The cases will publish forever the discouraging truth that the Supreme Court of the United States favors some laws over others, and is prepared to do whatever it takes to uphold and assist its favorites.”

Since the rule went into effect, 16,937 Wyoming residents have received insurance subsidies in violation of Obamacare’s text. Because these subsidies activate Obamacare’s individual and employer mandate, the IRS is subjecting Wyoming and 35 other states to billions in taxes and penalties in violation of a law passed by Congress.

The employer mandate will be thrust upon over 80 percent of Wyoming workers when it takes full effect in 2016. In addition, nearly 40,000 more Wyoming residents are currently subject to the individual mandate. Added together, nearly a third of the state’s population will suffer under Obamacare’s mandates because the Supreme Court upheld the IRS decision to arbitrarily enforce Obamacare against the wishes of Congress.

The Supreme Court ruled in a 6-3 decision that the IRS indeed has the authority to provide subsidies both on state exchanges and the federal exchange. Chief Justice John Roberts admitted in the majority decision that this statute must be interpreted to allow the law to expand health coverage. In a nutshell, Justice Roberts decided how he wanted to interpret this Obamacare statute in order to save Obamacare.

In John Roberts’ own words:

“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter.”

What does this mean for Wyoming? Obamacare is here to stay and will continue to raise the cost of insurance. Last year, premiums across the board increased 53 percent. Young males in particular saw their premiums rise 102 percent. When deductibles and premiums are added up, the average insurance plan now costs over $6,500. And next year, insurers have requested another 24 percent increase.

To add insult to injury, Obamacare imposes enormous fines and penalties on employers and individuals who decide not to purchase insurance. Employers that can’t afford to offer insurance are fined $2,000 per worker. Individuals that opt out of Obamacare face a $325 penalty and in 2016 will be fined $695 for failing to comply. Both mandates amount to a $370 million tax increase on Wyoming businesses and residents.

King v. Burwell’s decision ends the last major legal challenge to Obamacare. Many hoped that if the justices struck down Obamacare’s subsidies, Congress would be compelled to unite around an Obamacare repeal plan. But the court’s failure to uphold the rule of law does not remove Congress’s enormous responsibility to repeal the President’s healthcare law. Obamacare continues to increase premiums, narrow doctor networks and clog emergency rooms. Repealing this disastrous law is more important now than ever.

Following the Supreme Court’s creative reading of Obamacare in its King v. Burwell decision, politicians rejoiced, including those in Wyoming. Governor Matt Mead said in a Press Release:

“This decision allows 17,000 people in Wyoming to continue to receive a tax credit for health insurance and avoids many potential complications of those individuals losing that credit. Simply stated, this ruling maintains the status quo.”

Governor Mead neglected to mention that Wyoming’s roughly 17,000 insurance subsidy recipients won’t have these subsidies for long. Why? Because to make Obamacare appear deficit neutral, Congress limited how much these subsidies will pay in the years ahead and this means starting in 2019, patients will be responsible for covering a greater share of their premiums.

What does this mean for you? If you get an Obamacare insurance subsidy, it covers a portion of your premium based on your income: the less you make, the more it covers. If you and your spouse only make $15,730 annually, you receive a subsidy that covers 98% of your premium, while a couple making $62,920 is eligible for subsidies that cover 90.5% of their premiums.

However, under changes set to take place in 2019, individuals and families will likely pay a significantly higher proportion of their premium. When subsidy costs exceed half a percent of Gross Domestic Product (the Congressional Budget Office predicts this will happen in 2018), the subsidy will no longer increase as premiums go up. Instead, they will rise with the rate of inflation, which increases more slowly than premiums. The American Action Forum estimates that a couple earning $62,920 annually will have to pay 75 percent more in contributions by 2023, adding $4,344 to their annual premium.

As Obamacare continues to raise premiums, subsides will cover less and less of the cost of insurance. Wyoming’s premiums increased a whopping 33 percent in 2014 and 6.5 percent in 2015. Next year, insurance premiums are expected to increase by another 24 percent. One insurer, Time Insurance, wanted to raise premiums by 58 percent! Obamacare’s subsidies could be out the door sooner that we think, leaving patients stuck with an unaffordable bill.

But that’s not all. Two financing programs used to cushion insurance companies against Obamacare’s costs will expire at the end of 2016. Without them, premiums will rise even further.
Known as reinsurance and risk corridors, these programs subsidize insurers that cover large numbers of patients with more chronic health conditions who are more expensive to treat. The Obama Administration hoped that by compensating insurers for accepting very costly patients, insurers wouldn’t need to raise premiums across the board to pay for them.

However, after these programs expire, health insurers will still be required to cover millions of less healthy individuals. The Centers for Medicare and Medicaid Services estimated without this cushion, insurers would raise premiums by as much as 15 percent. The average Wyomingite could see their annual premiums jump by $1,000 when these programs expire.

Obamacare imposes enormous costs on patients and insurers, while simultaneously spending billions of dollars to hide these costs from the public. Over the next four years, both patients and insurers will lose their subsidies and face the full price of the Obamacare misadventure.

Governor Mead is by no stretch of the imagination a visionary government reformer. However, he took a big step towards expanding healthcare access in Wyoming by signing the Interstate Medical Licensure Compact into law. This will allow out-of-state physicians to practice medicine in Wyoming and lower healthcare costs for patients.

Physicians that wish to practice in Wyoming must receive a license from the Wyoming Board of Medicine. However, every state has virtually identical requirements for a doctor to receive a license. Prospective physicians must graduate from a medical school approved by the American Medical Association and they must pass the US Medical License Exam. If every state requires doctors to have the same basic credentials, why not let out-of-state doctors practice in Wyoming?

The Interstate Medical Licensure Compact does just that. The Compact allows physicians licensed in any state within the compact to apply for an “expedited” license to practice in any other member state. Since Governor Mead entered Wyoming into the compact, 9 other states have joined. While there are only 1,102 physicians currently licensed in Wyoming, there are a total of 53,618 physicians in compact states now free to practice here. If nine other state legislatures with pending Compact legislation joined in, Wyoming patients would have 247,470 doctors at their disposal. More doctors mean greater choices, shorter wait times, and lower costs.

Why does Wyoming need more doctors? Because we are chronically short of them. There are currently 191 physicians per 100,000 residents in Wyoming, compared to the national average of 260. According to Dr. James Bush, Medicaid Medical Office for the State of Wyoming, the problem in Wyoming when it comes to seeing a doctor is the “paucity of providers.” As a result of this shortfall doctors earn on average $226,000 per year, the fifth highest physician salaries in the country. Allowing out-of-state doctors to practice in Wyoming and relieve this shortage will go a long way towards improving access and reducing healthcare costs.

Indeed, expanding Wyoming’s access to physicians could not have come at a more pressing time. Since 2011, 10,000 “Baby Boomers” retire every day and will likely impose enormous demand on hospitals and doctors in the future. In addition, an estimated 26 million more individuals will be acquiring health insurance through Obamacare over the next few years and are expected to put even greater pressure on the healthcare system. Giving doctors the freedom to practice where they are most needed (like Wyoming) starts to address this doctor shortage.

But lawmakers could help reduce this “paucity of providers” even more. Wyoming should also join the Nurse Licensure Compact. A review of 26 studies showed that the health outcomes of treatments performed by nurses are identical to those of physicians. Patients even report having higher satisfaction with nurses than physicians. Nurses can also enter the workforce more easily than doctors. The education and training required to become a registered nurse is only six years, compared to 12 years required to become a physician.

Luckily for Wyoming, there is an interstate Nurse Licensure Compact signed by 25 states. Any nurse licensed in one of these states can apply for a “multistate” license and is free to practice in any of the participating states.

Patient access to healthcare can improve if Wyoming also joins the Nurse Licensure Compact. Joining the compact would give the people of Wyoming access to 1,347,312 nurses that work in compact states. Best of all, nurses are free to perform all the tasks that physicians can. They can initiate tests, diagnose patients, perform treatments, and prescribe medication all without the supervision of a doctor. Lowering Wyoming’s barriers to outside nurses would build off of the Interstate Medical Licensure Compact and make our healthcare system more responsive to the needs of patients.

Governor Mead took a crucial step towards improving healthcare access by entering Wyoming into the Interstate Medical Licensure Compact. Lawmakers in 2016 should make additional reforms to our healthcare system to broaden patient choices and lower costs.

When we walk into a hospital, we have access to a cornucopia of different tests, procedures, and specialists. What we will hardly ever see is how much all of this costs. When insurers pay most of the bill, patients have no incentive to find the best deal, and hospitals are more than happy to keep their cost hidden. Now a revolution is underway to pull back the veil on what hospitals are charging.

For 70 years, insurance companies paid most of our healthcare bills. When someone else is paying, why look for the best deal? Hospitals have exploited our disregard for value by raising prices to astronomical levels. Between 1985 and 2015, the cost of medical care has quadrupled. This is unsustainable.

Many states are trying to make patients more cost conscious by forcing hospitals to post their prices on websites called All-Payer Claims Databases, or APCDs. However, knowing the official price of a hospital service is useless because insurers rarely pay the listed price. That’s because insurers and hospitals negotiate fees in advance—often at a fraction of the list price. Because these website don’t actually provide meaningful information, patients are no more informed than before.

Even when states compel healthcare providers to reveal how much insurers pay, politicians exempt large swathes of the industry from the rules. For example, some states require that hospitals show the cost of inpatient services but not outpatient ones. In addition, these laws often apply to hospitals but leave private practices free to conceal their prices.

In Wyoming, our hospital association voluntarily launched an APCD with the same problems found in mandatory databases. The site, wyopricepoint.com, only tells visitors the listed price of procedures and not what insurers actually pay for them. Established hospitals that benefit under the current system do not seem to be interested in showing patients their real prices.

Indeed, nearly every state’s transparency policies received an F grade from the 2014 Report Card on State Price Transparency Laws.

If APCDs aren’t the answer to price transparency, what is?

When it comes to informing patients, no one does it better than hospitals that make transparency part of their business model. In Oklahoma City, the Surgery Center of Oklahoma posts the price of every service they render online. The Surgery Center’s cofounder and head Anesthesiologist, Dr. Keith Smith started the facility to provide an affordable alternative to the current system that obscures prices and fleeces patients:

“It makes me mad that a lot of people are bankrupted by our current healthcare system when many times the costs are completely unjustified.”

For 15 years, Dr. Smith and the Surgery Center’s 40 surgeons have provided care at a fraction of the cost of their competitors. Surgery Center patients pay 30% to 80% less for services than those performed in Wyoming. For example, a hip replacement here costs $28,208 compared to just $19,400 at the Surgery Center. Imagine if we enjoyed those savings.

After seeing Dr. Smith’s success, providers are following his example and educating patients on what they’re paying for. One health plan administrator, the Kempton Group, developed a network of 29 facilities across five states that make shopping for medical care as easy as logging onto Amazon.

Wyoming should welcome physicians looking to bring this kind of price sanity to our healthcare system and not impose faux transparency mandates on providers that have failed in other states.

Contrary to the claim of Obamacare’s supporters, patients have too much access to healthcare. When insurers cover most of our bills, we’re encouraged to take every test and procedure our doctors recommend, regardless of their value. Obamacare has made this problem even worse by banning out-of-pocket fees for many services. The push to overuse medical care is not only wasteful, it’s dangerous to our health.

Wyoming Senator Charles Scott raised the issue of wasteful healthcare at a health policy panel at the National Conference of State Legislatures Summit in Seattle, Washington.

The Senator asked the audience and his fellow panelists: does Obamacare “solve our fundamental problems?” He answered his own question when he said, “The real problem isn’t [premium] rates, but excessive utilization. I look at any reform saying ‘does it help us solve that problem?’ And the answer I come to… is that it does not.”

Indeed, roughly one-third of all medical care paid for in America is unnecessary, excessive, or wasteful, according to a 2009 Institute of Medicine report. Because insurers pay doctors on a fee-for service basis, doctors have a huge incentive to perform as much procedures as possible. And patients have no reason to question their doctor’s advice when they often pay so little of their bill.

How does Obamacare make our healthcare system even more profligate? According to Senator Scott, “I think there’s too much incentive to get everything paid for, so there’s no individual responsibility. There’s no effort to control the incentives for excessive use.”

He’s right. Obamacare forces insurers to cover preventive services without any out-of-pocket costs to patients. These include annual physicals, lung cancer tests, cholesterol screening, and many more. The Obama administration sold these “free” preventive services by claiming they save money over a patient’s lifetime. However, these tests just add to the waste.

This is because most of Obamacare’s preventive services provide zero medical benefits. According to the U.S. Preventive Services Task Force, regular ovarian and testicular cancer screenings don’t make us any healthier. Similarly, a 2012 review of 14 studies found that annual physicals do not lower the risk of serious illness or premature death. Despite how little we benefit from these services, Obamacare forces us to pay billions for them.

Wasteful medical care also endangers patients. In Senator Scott’s words: “When you get an unnecessary test or medical procedure, it’s very likely it has some small risk. Anything that’s invasive, anything that uses drugs, anything that uses radiation carries some risk. For instance, the unnecessary CT scans carries a 1 in 2000 risk of causing fatal cancer.“

This problem goes beyond unnecessary CT scans. Every visit to a hospital carries the risk of being misdiagnosed, exposed to diseases, or injured on the operating table. When doctors over supply medical care, patients often leave hospitals worse off than before. An estimated 210,000 die every year from medical errors. Distancing patients from the cost of their care only leads to more unnecessary procedures and greater hospital injuries.

Obamacare’s fatal misdiagnosis of the problem is that more healthcare is better healthcare. At best, excessive procedures raise our insurance premiums and leave us no healthier than before. At worst, they increase our chances of being hurt or killed by medical errors. Socialized medicine isn’t just bad for our pocket-books, it’s bad for our health.

The Department of Veterans Affairs is the perfect example of socialized healthcare. The federal government owns all the hospitals, employs all the staff, and leaves patients to languish and sometimes die on waitlists. A year after news broke that VA hospitals kept veterans waiting months to see a doctor, including in Wyoming, the VA still refuses to admit its methods endangered veterans. But new evidence reveals that the agency’s practices are disastrous for our wounded warriors.

The Office of Special Council, the investigative arm of the federal government, recently reported that VA scheduling procedures directly resulted in the death of many patients. In 2010, former Veterans Affairs Secretary Eric Shinseki started issuing bonuses to administrators that kept patient wait times low. Administrators that kept patient wait times below 14 days could earn up to $15,000 in bonuses. Sounds great right?

But to meet these goals, administrators used a slight of hand to conceal how many patients were waiting to see a doctor. Patients that could be seen within 14 days were submitted into the official electronic record. The rest were put on a secret paper log, hidden from official scrutiny. While VA hospitals looked like they were seeing patients in a timely manner, patients suffered for months in need of care.

An internal audit discovered that over 90 percent of veteran hospital administrators, including some at the Cheyenne VA Medical Center, earned bonuses while abandoning patients on waiting lists. By 2014, over 270,000 veterans were waiting at least 125 days to see a doctor.

VA administrators excused this obscene patient abuse by claiming they misunderstood the VA’s scheduling procedures. This couldn’t be further from the truth. Cheyenne’s VA staff were fully aware of VA procedures and knowingly disobeyed them under orders from supervisors. Emails sent by former Telehealth Coordinator David Newman explicitly instructed staff to falsify wait times:

”Yes, it is gaming the system a bit. But you have to know the rules of the game you are playing, and when we exceed the 14 day measure, the front office gets very upset.”

Despite overwhelming evidence, the VA has little interest in disciplining abusive employees. Internal documents leaked to the New York Times revealed that only eight employees were punished because of this scandal. One was fired, one entered early retirement, another’s removal is pending, and the rest have been suspended for two months with full benefits. Yet a VA audit found that 13 percent of its schedulers nationwide were altering wait times under orders from administrators.

To add insult to injury, the director of Cheyenne’s VA who oversaw this suffering, Cynthia McCormick, remains in her position and kept over $27,000 in bonuses she received while wait times were doctored.

The VA’s outrageous response to this humanitarian tragedy shouldn’t surprise anyone. The agency maintains that patient wait times didn’t result from inept incentives and corrupt workers, but from a “failure to properly train staff” on proper scheduling procedure. Even worse, the agency refuses to admit these abuses “resulted in a danger to public health and safety.”

However, the Office of Special Council reported to President Obama that the VA’s claims of “harmless error” were unsupported. When patients can’t see doctors in time, their conditions worsen and many pay the ultimate price. After combing through government investigations and media reports, former Oklahoma Senator Tom Coburn found nearly a thousand veterans died as a result of the VA’s systemic neglect of patients. These include eight patients who died waiting for appointments at Cheyenne’s VA.

After serving in battle to protect our freedoms, our veterans require some of the most intensive care imaginable. Yet they are stuck in an unresponsive and unaccountable federal agency, from which they too should be freed. Our veterans deserve better.

Testimony of Charlie Katebi, Healthcare Policy Analyst, Wyoming Liberty Group

Before the Labor, Health, and Social Services Committee
August 24, 2015

Direct Primary Care-Insurance Exemption

Introduction:

My name is Charlie Katebi. I am a Policy Analyst at The Wyoming Liberty Group. I would like to express my thanks to the Joint Labor, Health and Social Services Committee for the opportunity to speak here this morning.

The Affordable Care Act was passed into law to address a very real problem. The problem is that health care costs have exploded over the last few decades. Unfortunately, the ACA has accelerated this trend.

And until a new President repeals the ACA, this law will remain a reality in our healthcare system.

If we want real healthcare reform that brings down the cost of care, we need to exploit the few pockets of our healthcare system that remain unregulated by the ACA, and allow innovation to take place within them.

For this, and other reasons, I urge you exempt Direct Primary Care from Wyoming’s Insurance regulations.

The Problem: Third Party Insurance

Why is healthcare so expensive?

It’s because health insurance does a terrible job of paying for value. Under our current system, Insurers pay providers on a fee for service basis. The more procedures that doctors provide, the more they’re paid. Doctors have every incentive to provide as many services as possible, regardless of their health benefits.

And to be clear, excessive care doesn’t actually make us healthier. An institute of Medicine report found that roughly one-third of all healthcare services we use is completely unnecessary and does nothing to improve our quality of life.

This excessive care hasn’t come cheap either. According to Ehealthinsurence.com, the average insurance premium now costs $448 per month in Wyoming. And in 2016, insurers have requested raising premiums 38%, on average.

Third Parties Raise Costs on Providers

Insurance is also becoming unaffordable for healthcare providers. The average private practice spends at least a quarter of their budget on simply interacting with insurance companies. This involves billing, negotiating reimbursements, as well as complying with federal and state insurance regulations.

It’s no wonder we’re seeing more physicians selling their practices, and opting instead to work for hospitals. A survey conducted by the consulting firm, Accenture, highlighted an alarming trend. The number of physicians working independently dropped from 57 percent in 2000 to just 39 percent in 2012. When asked why, the vast majority cited the growing cost of running their practices.

If these trends continue, Wyoming’s patients will have even fewer choices when it comes to their healthcare provider.

Direct Primary Care Benefits Patients:

What if patients could access essential medical care at an affordable price and physicians could treat them without being burdened by onerous overhead costs?

With Direct Primary Care we can achieve both goals.

It aligns the interests of patients with their doctors. When patients pay a single fee for their care, it is in their doctor’s interest to keep them as healthy as possible, as cost effectively as possible. If your doctor provides too much care, those unnecessary services won’t be reimbursed. On the other hand, if your doctor provides too little care, and your health worsens, he will have to provide more expensive care in the future, and those costs will have to be paid out of his pocket.

This type of care is relatively new, but it’s already showing it can deliver both positive health outcomes as well as savings for patients.

The Seattle based hospital group, Qliance, compared patients with traditional insurance against those with Direct Primary Care. They found that direct care patients had 43 percent shorter hospital stays, 65 percent fewer ER visits, and needed 82 percent fewer surgeries. By the way, Qliance’s average fee is just $65 per month.

Direct Primary Care Benefits Doctors:

Direct Primary Care offers additional benefits for Wyoming’s healthcare system in particular. This state has a significant doctor shortage because exorbitant administrative costs have discouraged many physicians from starting private practices here.

Direct Primary Care would allow Wyoming’s doctors to treat their patients without spending enormous sums dealing with insurers. This will lower a major barrier to entry for many doctors wishing to practice, and encourage more doctors to open practices here.

After seeing these results, more physicians than ever want to contract directly with patients. Seven percent of physicians already offer Direct Primary Care. And 13 percent of physicians want to provide this type of care in the future, according to a survey by the Physician Foundation.

Regulatory Risks

But despite Direct Primary Care’s benefits, state insurance regulations threaten this business model. For a direct care provider to remain viable, a patient’s monthly fees must be enough to cover the costs of their care.

For example, Qliance requires older patients that have more expensive healthcare needs to pay $20 more in monthly fees
than younger patients.

However, many state insurance boards, including Wyoming’s, consider this to be the behavior of a “risk bearing entity” and subject to their authority. This would force Direct Primary Care providers to comply with all the rules and regulations that have made health insurance so expensive.

In order to encourage this innovative new way of delivering care, 13 states have passed legislation exempting Direct Primary care from insurance regulations. These states understand the value of Direct Primary Care and are taking action to protect it.

Conclusion

If we want to make healthcare affordable and empower patients with greater choices, we need to allow them to access essential medical care outside of our broken health insurance system.

For these reasons, I urge you to exempt Direct Primary Care from Wyoming’s insurance regulations.

Thank you for your attention.

Charlie Katebi
charles.katebi@wyliberty.org

Lovell, WY- The Wyoming Liberty Group testified in favor of Direct Primary Care before the Joint Labor, Health, and Social Services Interim Committee this week, an innovative healthcare payment plan that if exempted from state insurance regulations would expand health access at a fraction of the cost of traditional health insurance.

“Direct Primary Care has lowered healthcare costs for patients in other states because it aligns the interests of patients with their doctors,” said Charlie Katebi, WyLiberty’s Healthcare Policy Analyst. “When patients pay a single fee for their care, it is in their doctor’s interest to keep them as healthy as possible, as cost effectively as possible.”

Under Wyoming’s insurance statutes, healthcare providers that offer payment plans are regulated as insurance. Under a Direct Primary Care agreement however, patients pay a flat monthly fee and in return, their doctors provides medical services that are laid out clearly in a contract.

“State insurance regulations threaten to keep Direct Primary Care out of Wyoming,” said Katebi. “Wyoming’s Department of Insurance considers these providers “risk bearing entities” and subject to their authority. This would force Direct Primary Care providers to comply with all the rules and regulations that have made health insurance so expensive.”

The draft bill, in its current form, would allow physicians to contract directly with patients to provide “routine health services.”

“We shouldn’t be restricting Direct Primary Care to routine services,” said Representative Eric Barlow. “These providers will be offering all types of services in the future and this bill shouldn’t tie their hands.”

“Committee members see the benefit of Direct Primary Care and worry the draft’s language restricts participating physicians,” said Katebi. “Amending the bill’s language would remove legal barriers and allow this practice to help make healthcare affordable in Wyoming just as it has in other states.”

The Committee will consider amending the bill at October’s Interim Committee Meeting in Buffalo, WY.

Click Here for Wyoming Liberty Group Testimony.

Click Here for more on Direct Primary Care

For more information or to set up an interview, please contact:
Charlie Katebi, Health Care Policy Analyst
307-632-7020

In a promising moment of bipartisan agreement, members of Wyoming’s Joint Labor, Health and Social Services Committee began drafting legislation that will allow patients and physicians to contract directly with each other and escape our disastrously overregulated insurance system.

This legislation will strengthen every Wyoming resident’s Constitutional right to health freedom.  As stated:

“Any person may pay, and a health care provider may accept, direct payment for health care without imposition of penalties or fines for doing so.” – Article 1, Section 38(b) of the Wyoming Constitution

Wyoming’s Labor Committee members recognized Direct Primary Care’s tremendous potential and wanted to make sure doctors can practice it uninhibited by onerous regulations.  The initial draft bill only allowed doctors to provide “routine healthcare services” through direct care.  Representative Eric Barlow worried these words will confine direct payment doctors to only providing basic primary care:

“We shouldn’t be restricting Direct Primary Care to routine services. These providers will be offering all types of services in the future and this bill shouldn’t tie their hands,” he said.

He’s right.  Regulations with broad powers hold back innovations that weren’t even considered possible when they were written.  In fact, seven percent of specialist physicians are already interested in transitioning to direct pay in the next few years, according to the Physician Foundation.  As direct care’s benefits become more apparent, these numbers will continue to grow. We shouldn’t hobble physicians looking to provide an affordable alternative to our broken healthcare system.

For decades, private insurance has paid for our healthcare on a fee-for-service basis.  The more services we use, the more doctors are paid. Doctors have every incentive to provide as many services as possible, regardless of whether they improve our health.

Our insurance system is also a nightmare for physicians.   Private practices spend a quarter of their budgets on simply doing business with insurers.  Submitting claims, negotiating reimbursements, and complying with state and federal insurance regulations require an administrative bureaucracy fewer and fewer independent practices can afford to pay for.  Since 2000, the share of physicians working independently fell from 57 percent to just 39 percent as administrative costs continue to increase.

Some doctors have finally had enough and now contract directly with their patients.  Under Direct Primary Care, patients pay their physicians a flat monthly fee in return for medical services clearly laid out in a contract.  Doctors love it because they can treat patients without paying huge sums to deal with insurers. And patients can pay just $100 a month for direct care, less than a quarter of what the average Wyomingite pays in insurance premiums.

When providers charge a fixed fee, the onus is on them to control costs and not pass them onto patients.  They must keep their patients as healthy as possible, as cost-effectively as possible.  If your doctor provide too much care, the cost of those unnecessary procedures will come out of his pocket.  On the flip side, if your doctor provides too little care and your health worsens, he will have to pay for more expensive care in the future.

Direct care offers additional benefits for doctors.  Physicians within the direct care network, Qliance, collect $700 to $800 per patient every year in membership fees.  That’s roughly three times more than if they were being paid through traditional insurance.  It’s no wonder eight percent of primary care physicians already offer this service across the country.  And another 15 percent are planning to transition to direct care over the next few years.

Direct Primary Care has proven it can deliver both savings for patients and greater earnings for doctors.  This is an opportunity Wyoming can’t afford to pass on.